Binance Prosecution Sparks Concern In Brussels

December 5, 2023
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Members of the European Parliament have probed the European Commission over whether incoming crypto rules will be able to rein in bad actors, in light of the Binance case in the US.

Members of the European Parliament (MEPs) have probed the European Commission over whether incoming crypto rules will be able to rein in bad actors, in light of the Binance case in the US. 

Centre-left parliamentarians Eero Heinäluoma and Aurore Lalucq have asked the commission whether it believes Binance can continue being active in the EU, considering criminal charges the company is facing in the US. 

In November, the US Department of Justice announced that Binance had pleaded guilty to crimes that include money laundering offences, know your customer (KYC) failures and violations of the US Bank Secrecy Act (BSA).

Changpeng Zhao, chief executive of the company, has since resigned and pleaded guilty to a US criminal charge of failure to protect against money laundering. 

In addition, the US Treasury Department has said that the crypto exchange has failed to report more than 100,000 suspicious transactions linked to ransomware attacks, child sexual abuse, large-scale hacks, the narcotics trade and terrorist groups including al-Qaeda and Daesh.

However, the MEPs point out that Binance continues to be licensed in six EU member states, including France and Italy. 

This, they say, contradicts Article 24 of the EU’s flagship Markets in Crypto-Assets (MiCA) regulation. 

This part of the MiCA legislation concerns the withdrawal of authorisation, and one reason for national competent authorities to do so is failing to comply with provisions in the 5th Anti-Money Laundering Directive (5th AMLD). 

MiCA has yet to enter into force in the EU, but this submission to the commission does show that the pressure will be on national authorities to root out bad actors with their newfound legal tools. 

The MEPs have also asked: “How will the commission ensure the offences the company was found guilty of in the US will not take place in the EU?” 

Heinäluoma, a Finnish MEP, has been active in scrutinising crypto during his time as an MEP. 

For example, he was co-rapporteur for the Transfer of Funds Regulation (TFR), where he pushed for tough traceability rules. 

He also collaborated with other progressives in the European Parliament to place tough environmental rules on crypto firms via MiCA. Although this amendment did not pass, it would have effectively outlawed crypto mining. 

The questions have been raised under Rule 138 of the European Parliament’s Rules of Procedure, which gives parliamentarians the right to pose questions to figures in the EU’s institutions, such as the European Commission and the Council. 

As a general rule, the questions shall be answered by the addressee within six weeks.

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